Brotopia Read online

  COULD WOMEN HAVE PREVENTED THE DOT-COM BUST?

  Liemandt’s bro style—his volatile mixture of entitlement, hubris, and risk taking—came to be shared by many founders and CEOs in the 1990s, and investors applauded. If you weren’t promising to create a billion-dollar company, the VCs didn’t take you seriously. Given that entitlement, hubris, and risk taking are the very personality traits that show significant gender differences, it’s little surprise that so many of the founders selected for investment were men.

  There is plenty of blame to go around for the dot-com crash. With everyone in the system making so much money, few were brave enough to call bullshit. In 1996, the Federal Reserve Board chairman, Alan Greenspan, famously warned of “irrational exuberance” among investors, so many of whom threw money at companies with outrageous price-to-earnings ratios. It took four more years for investors to understand his message, and when they did, it was a financial catastrophe. Starting in the spring of 2000, $5 trillion in market value was lost in less than two years. When the bloodbath stopped, fully half of those promising dot-com companies no longer existed.

  Until the crash there was little incentive to stop the game, including among the business press, which did as much cheerleading as investigating. But if investors’ love affair with bro style helped fuel the boom—and it did—it’s fair to ask, if more tech leaders of the 1990s had been women, could they have helped avoid the bust, or mitigated it?

  While no control group exists for history, the question is worth considering. For example, researchers like Geoff Trickey have speculated that the financial crash of 2008 might have been significantly different had women played a more prominent role in high finance. “Risk-taking is desirable and required in the workplace, but we need a balance to avoid it spiraling out of control,” Trickey wrote. “If you’re not recruiting people of all risk types, you’re missing out on a fundamental self-controlling mechanism. It’s a bloody good formula for survival.”

  Of course, individual men and women may not conform to the conclusions of Trickey’s research. But his findings do suggest that the simplest way to create a balance between risk taking and caution in a business is to make sure you have a gender-balanced workplace. And other research bears that out.

  An extensive study by the Peterson Institute for International Economics, a nonprofit that studies international economic policy, analyzed nearly twenty-two thousand publicly traded companies across various industries in ninety-one countries. The study found that companies whose leadership was at least 30 percent female were 6 percent more profitable. There’s no reason to believe that tech, specifically, would be any different. Had more women participated in the first dot-com boom, we might have had fewer make-it-or-break-it “unicorns,” and instead had a healthier herd of bust-resistant workhorse companies.

  AFTER THE CRASH

  The loss of $5 trillion certainly changed the tech industry. Investors became more cautious about out-of-whack price-to-earnings ratios and business plans sketched on the backs of cocktail napkins. But while many midlevel employees were hurt when the bubble popped, some founders walked away with millions. Many became the venture capitalists whom we will meet in the next chapter, and because they had emerged from the economic rubble as winners, their idea of who should be running tech companies (young men) did not change. As VCs, their influence in the industry only grew stronger, while women’s position languished.

  According to data compiled by the National Center for Education Statistics, in the years after the bust (2000 to 2008), the percentage of women earning computer science degrees plummeted another 10 percent, holding steady at around 18 percent until 2011. (That’s a far cry from the near 40 percent peak, remember, in 1984.) Once again, women had lost ground, and dramatically so, compared with men.

  Why did the bursting of the bubble hurt women more than men? Perhaps women were discouraged by the tough competition as thousands of newly unemployed computer programmers flooded the postcrash job market. They might also have been responding to a then-widespread fear that once-lucrative tech jobs would disappear or move offshore, making it chancier to pursue a career in Silicon Valley. To women, the tech economy might have looked like a tightrope they didn’t need to walk.

  By 2004—the year Google went public and Facebook was founded—the industry had recovered, and there were plenty of jobs to go around. Silicon Valley was resurrected as the dream destination where entrepreneurs—who fit a certain stereotype—could become millionaires overnight and lower-level employees could get rich simply by picking the right company to join. Tales of enormous fortunes spread, igniting yet another California gold rush. In 2010, the movie The Social Network further glamorized start-up life and established Mark Zuckerberg as the exemplum of what a successful founder looked like. And the men flocking to the epicenter of technology continued to vastly outnumber women.

  Today, it’s estimated there are more than half a million unfilled tech jobs, a number that is expected to balloon to one million by 2020. The industry is facing a labor crisis much bigger than that of the 1960s, when Cannon and Perry canonized nerds as the ideal hires. Talent is in super-short supply now, and yet the stereotype of what makes a good engineer continues to exclude half the population. Silicon Valley recruiters say, “It’s a pipeline problem,” meaning that there are not enough women graduating from college with the necessary technical skills. If they had more qualified women to choose from, hiring managers will tell you, they would hire more of them. And many of them mean it.

  Missing from this explanation is that the tech industry itself created the pipeline, which is very narrow and built on fanciful assumptions about what it takes to participate. Also missing is any acknowledgment that from its earliest days the industry has self-selected for men: first, antisocial nerds, then, decades later, self-confident and risk-taking bros. That these assumptions have greatly harmed women is obvious, but I would also argue, for reasons discussed in this chapter, that they have also harmed the individual tech businesses, the industry as a whole, and our ever more tech-focused culture.

  How different our world might be had the designers of those early screening tests not decided that people who don’t like people made for the best programmers. What if women had been encouraged to join the tech industry rather than having been ostracized by it? What if Telle Whitney and tens of thousands of women like her had spent their working lives in a welcoming atmosphere instead of an isolating, hostile one? How would our economy and culture be different now if the leaders of the 1990s internet and personal computer revolution hadn’t been so remarkably full of themselves and comfortable risking trillions of investor dollars? But instead of this alternate universe, we have seen the rise of the nerd-bro dream and the codification of an ultimate boys’ club.

  2

  THE PAYPAL MAFIA AND THE MYTH OF THE MERITOCRACY

  THE LAST TIME I interviewed Peter Thiel, we were onstage at the LendIt Conference in the spring of 2016. Thiel, a co-founder of PayPal, was perhaps at his high point of cultural influence. His book Zero to One, which posited a new way to think about innovation and build successful companies, had a long run on the New York Times bestseller list and was a huge hit in China and other foreign markets. The presidential election was only seven months away, but during our interview Thiel claimed he would have nothing to do with it. Just weeks later, he declared his support for Donald Trump—a move that would cost him considerable social capital among the Silicon Valley elite.

  The day I spoke with him, however, Thiel was still seen by many as the philosopher-king of Silicon Valley, partly because of his founding role in PayPal (which sold to eBay in 2002 for $1.5 billion) and his wide-ranging investments (from Facebook and Tesla to bioengineering and nuclear energy) but most recently because of his influential book. Hailed by the Atlantic as “a lucid and profound articulation of capitalism and success in the 21st century economy,” it had become required reading among tech entrepreneu
rs and other heavy hitters.On the LendIt stage, Thiel wore the standard VC uniform: well-worn jeans, black belt, and an immaculately pressed open-collar white shirt. He was sweating. Not, I think, because of my penetrating questions, but because he is just naturally uncomfortable in front of audiences and under stage lights. Though not a particularly polished speaker—he stammers and repeats himself—he appears to think through each of his answers in the moment, instead of relying on prepared talking points. Over the first two-thirds of the interview, he made interesting and insightful points on issues such as the evolution of the Chinese economy, the state of American politics, and the future of technology.

  Then I asked him about the lack of diversity among the Silicon Valley elite. Two weeks earlier, Thiel’s eleven-year-old venture capital firm, Founders Fund, had made headlines for hiring its first woman partner, Cyan Banister (the wife of Scott Banister, an early PayPal board member). I asked for Thiel’s take on the lack of women in the venture industry as a whole and where the responsibility lay for the disparity.

  “We all have a responsibility to do more,” he began. “The disparities are really big . . . There’s something about tech that matters a lot. There may be a huge disparity in chess players or math professors, but that doesn’t matter quite as much as the only industry that’s really working in the U.S.”

  The critical issue, he went on, was the lack of women as founders. By his count, only two women were founders among the 150-odd “unicorn” companies, those worth over $1 billion. “What really defines the culture in Silicon Valley is not the executives or the venture capitalists; it’s the company founders. And that’s probably the place where the disparity’s the most extreme.”

  This serviceable answer got little reaction from the crowd. He acknowledged the problem, cited some data to illuminate the situation, and agreed that the issue was important.

  What was his prescription for changing things?

  “I don’t know what to do about that,” he admitted. Full stop.

  Thiel has been an industry leader for two decades, yet he took no personal responsibility for tech’s gender disparity and apparently had no thoughts about how to fix it. The subtitle of Zero to One is “Notes on Startups, or How to Build the Future,” but when I reread it after the conference, looking to see how he’d addressed this critical issue of women being left out, I found that this “huge disparity” wasn’t even mentioned. In fact, he’d managed to write the entire book without once using the word “woman” or “women.” I was left suspecting that this big, important “responsibility to do more” wasn’t, in fact, much on his mind.

  Thiel’s apparent lack of interest in women’s status really matters, because Thiel isn’t just influential. He is the undisputed don of a group widely known as the PayPal Mafia, a cadre of men who constitute one of the many reasons Silicon Valley became so dominated by white men of a certain age and educational background. To understand just how deeply the beliefs, decisions, and actions of this group have affected the industry, we have to go back to the mid-1990s and meet them when they were a band of brainy misfits at Stanford University.

  CONTRARIANS BY NATURE

  Keith Rabois, a PayPal alumnus who is now a leading venture capitalist, clearly remembers the first time he met Thiel. It was Rabois’s first day as a Stanford freshman, and Thiel, a junior, was walking through the dorms handing out copies of the Stanford Review, the conservative student paper he had co-founded. Thiel normally slipped the newspaper under closed dorm-room doors, but Rabois’s door was open and the pair got to chatting.

  Rabois, a conservative himself, was immediately intrigued by both Thiel and the firebrand paper he was editing. Not long after, Rabois told me, he became part of the group of unruly college students, none of them computer science majors, who had banded together to share their right-wing ideas with the rest of the generally left-leaning Stanford population. “We knew nothing about tech and talked mostly about politics,” he says; in fact, they were studying law, philosophy, and government. Rabois remembers feeling as if he and his peers at the Stanford Review were “outcasts” in a liberal school.

  Thiel himself told me he too often felt like an “outsider” growing up. An immigrant, with his family, from Germany, he attended seven different elementary schools as a child, was raised Evangelical Christian, and found himself questioning beliefs as widely accepted as Darwin’s theory of evolution. At Stanford, refusing to conform to the prevailing views of the other students became a point of pride. “We all started most questions with an anti-conventional-wisdom bias. It almost didn’t matter what the topic was,” Rabois tells me. They were contrarians by nature.

  No one should be forever judged by the certainties they had when they were undergraduates. Nevertheless, the ideas expressed by Thiel’s group at Stanford are worth reexamining because the ideas they formed in the 1990s inform the worldview they hold today. And given the PayPal Mafia’s outsized influence in Silicon Valley, this group of men’s worldview has affected our culture and changed a lot of lives.

  In the early 1990s, many universities were working to create a more multicultural curriculum, and Stanford began by instituting a new program called Cultures, Ideas, and Values. It required students to read a more diverse set of authors, including more women and minorities, rather than just canonical works such as Plato, Shakespeare, and the Bible. There was also a push to create more diversity among students and faculty. Thiel and his colleagues at the Stanford Review saw these efforts as deeply misguided, writing that this was an attempt by professors to impose their personal anti-Western and antipatriarchal beliefs on the student body. Universities should be blind to gender and race, they argued. Whites and Asians should not lose academic posts to candidates from more underrepresented groups. Only measurable achievement and academic merit should matter.

  They also questioned the value of diversity and the idea that universities, companies, and governments function better when a broad range of people participate. “We were pretty critical of affirmative action. We forecast how it was going to play out, saying it’s going to really, really penalize Asians, and that’s exactly what happened,” Rabois told me, referencing a recent lawsuit against Harvard University that alleges Asian Americans are discriminated against in the admissions process.

  The Stanford Review also targeted feminism. David Sacks, a Stanford Review columnist, who would become the early COO at PayPal while Thiel was CEO, authored several pieces in a twelve-page issue devoted entirely to criticizing the new awareness about date rape and sexual assault. The word “RAPE” in bold letters takes up half of the front page, and the issue includes a piece on “How to avoid sexual assault charges,” complete with ways to thwart the “feminazis,” punctuated by a modified swastika. In one editorial, Sacks wrote: “If you’re male and heterosexual at Stanford, you have sex and then you get screwed.”

  One Stanford friend who disagreed with Thiel about diversity is former PayPal executive vice president Reid Hoffman, who says his relationship with Thiel was forged on their willingness to debate opposing points of view. “Thiel had heard there was this pinko Commie, and I had heard there was this right-wing Attila the Hun,” Hoffman told me of their first meeting. “On politics, I don’t think there’s anything we agree on.” When their debates turned to diversity, Hoffman says he told Thiel, “Look, I don’t disagree with you, there is a certain amount of political correctness on the left . . . but the issue [of diversity] is real.”

  But Hoffman was the exception. Most of Thiel’s group—though prescient about the overcompensation that could potentially be caused by colleges’ political correctness—were libertarian firebrands who promoted their views like a brigade of militant free-speech avengers. If one of their purposes was to rile the mostly liberal student body, they succeeded. To prove just how committed he was to the First Amendment, Rabois once yelled “Faggot! Hope you die of AIDS!” outside the home of a Stanford administrator (who had r
eportedly kicked a student out of university housing after months of anti-gay harassment, including using the word “faggot” behind closed doors). Rabois took responsibility for the remarks at the time, writing, “The intention was for the speech to be outrageous enough to provoke a thought of ‘Wow, if he can say that, I guess I can say a little more than I thought.’” Maha Ibrahim, who also went on to become a venture capitalist, was majoring in economics at Stanford during this period and recalls the pronouncements of the Stanford Review with a shudder. “It was just bad. I felt it was just this isolated voice that was so extreme that it was horrible and incredibly unfortunate,” she told me. The liberal backlash was so great that Rabois, who by this time had graduated and gone on to the university’s law school, left Stanford and finished his JD at Harvard.

  As for Thiel, after graduation he went on to earn a law degree at Stanford, then clerked for a U.S. circuit court judge, worked as a securities lawyer, and wrote speeches for the former secretary of education William Bennett. In 1995, Thiel and Sacks took the ideas they had developed at the Review and expanded them into a book, The Diversity Myth: “Multiculturalism” and the Politics of Intolerance at Stanford. “Multiculturalism,” they wrote, “caused Stanford to resemble less a great university than a Third World country, with corrupt ideologues and unhappy underlings.” Revisiting their critique of feminism and calls for gender diversity, they wrote, “The passionate hatred of men, the utopian demands for an elimination of all gender differences, the (totally inconsistent) demands for a uniquely female perspective, and the belief in widespread gender discrimination are the core of the new gender studies curriculum.” They even defended Rabois’s “faggot” remark, likening the campus backlash to the Salem witch trials.